Iran lawmaker urges action against Germany, European states over Munich rally
An Iranian lawmaker on Monday called on the Foreign Ministry to expel Germany’s ambassador in Tehran over a large rally by Iranians in Munich, and urged action against other European countries that allowed similar gatherings.
“Expel the German ambassador and charge d’affaires so they do not repeat such mistakes next time,” Javad Hosseinikia said during a parliamentary session. He also pointed to European countries more broadly over rallies by Iranians abroad.
Hundreds of thousands gathered in Munich to protest against Iran’s government as nationwide unrest continued inside the country. The rally coincided with a global security conference attended by world leaders in the southern German city.
To understand what could follow the Islamic Republic, it helps to start with where Iran stands now. As of February 2026, with the Islamic Republic still in power, tens of thousands of Iranians have been killed.
Inflation has surged: year-on-year inflation hit 60% in January, with annual inflation hovering at 45%. By comparison, Iraq’s inflation rate in 2002 – before Saddam Hussein was toppled – was around 19%, although Iraq had already lived through a severe five-year crisis from 1991 to 1995.
Years of politically mandated lending and the rapid expansion of private banks have pushed Iran into an acute banking crisis. Bank Ayandeh has collapsed, and by the Central Bank’s own criteria only nine banks in the country are not considered insolvent. The strain has now reached Bank Sepah, which pays the salaries of Iran’s military – an institution that itself was once created through mergers of military-linked banks to avert systemic failure.
Civilian deaths in the US-led invasion of Iraq to remove Saddam are widely estimated at roughly 7,000. In Iran, by contrast, at least 36,500 citizens were killed over two days and a matter of hours in what was described as a massacre – without any foreign military intervention – exceeding the toll of some of the largest wars and crackdowns in modern history over a comparable timeframe.
The economic disruption is already visible in daily life. In 2024, the state’s inability to supply gas in winter and electricity in summer meant at least one province was effectively shut for 72 of 291 working days. A survey by Iran’s Chamber of Commerce of more than 3,000 businesses found firms were operating at just 39% of capacity in autumn 2025.
Taken together, the figures suggest that even before the national uprising began in January 2026, Iran was already exhibiting the hallmarks of a country battered by war.
Pessimistic scenarios
Since the mid-2010s – especially after the civil wars in Syria and Lebanon – much of the media conversation about a post-Islamic Republic Iran has centered on worst-case outcomes. Those arguments have resurfaced again in recent months. The main scenarios typically cited are:
War and foreign intervention: In a central power vacuum, neighboring states could intervene directly or back separatist groups. Yet after the fall of Iraq’s Baathist regime and the Taliban in Afghanistan, regime collapse did not automatically trigger large-scale foreign invasions.
The challenge of post-collapse security, the argument goes, is likely to be as much political as military.
The Iran Prosperity Project, launched in 2025 as a transition-era economic and governance blueprint supported by exiled Prince Reza Pahlavi, sets out an “emergency phase” handbook that urges early outreach to neighbors – particularly Pakistan, Saudi Arabia and Turkey – as a way to contain spillover risks and reduce the chances of destabilization after a collapse.
Fragmentation and civil war: Another fear is a spiral into armed conflict – either from forces loyal to the Islamic Republic resisting change, or from ideological and ethnic fighting on the model of Syria, Libya or Yemen – creating space for extremist groups such as ISIS and driving insecurity along Iran’s borders. Supporters of this view point to the danger of militia-style violence and state breakdown.
At the same time, the reported entry of at least 5,000 Iraqi mercenaries during the January crackdown could be read as a sign of uncertainty about the reliability of domestic forces.
And during the January uprising, the same pro-monarchy slogans were heard from Kurdish-majority Kermanshah to Turkish-dominant Tabriz and Baluch-majority Zahedan – alongside Tehran and Fars – without clear evidence of widespread ethnic or sectarian fracture, even as the risk is still seen as latent.
A rebranded Revolutionary Guard dictatorship: In this scenario, the Islamic Revolutionary Guard Corps (IRGC) fills the vacuum, consolidating power with a less overtly religious posture.
But the IRGC’s reach is already a central driver of international pressure on the current system, making it unlikely – under this reading – that foreign powers would accept its continued dominance after a collapse.
A drawn-out transition: A slower-motion breakdown is another widely cited possibility: deepening economic isolation, accelerating brain drain, sharp declines in production, rolling protests and a society worn down by exhaustion and uncertainty.
Disillusionment with transitional justice and a revival of the Islamic Republic: A further risk is political backlash if accountability is perceived as weak. Public anger over mass killings and systemic corruption could turn against a transitional administration if leading perpetrators are not quickly brought to justice and if assets transferred abroad – an outflow US Treasury Secretary Scott Bessent pointed to in January – cannot be traced and seized. In that climate, loyalist networks could regroup, backed by money moved offshore.
Planning for transition
By most economic and statistical measures, Iran under the Islamic Republic already bears the hallmarks of a war-damaged state. The January killings were unprecedented in scale over such a short period.
In recent years, the Iran Prosperity Project – backed by Prince Reza Pahlavi and affiliated with advocacy organization the National Union for Democracy in Iran – has developed an extensive policy framework for a post-Islamic Republic transition.
A series of white papers published on the project’s website address governance, energy, foreign policy, healthcare, industry and macroeconomic stabilization.
From these documents, the authors compiled an “Emergency Period Handbook” outlining how to manage the interval between regime collapse and the installation of a new government.
The latest version, released in summer 2025, spans 15 chapters and focuses on the first 100 to 180 days after the fall of the Islamic Republic.
Supporters describe it as the only fully structured opposition blueprint for the immediate post-collapse period, drafted by a 26-member team of specialists with input from additional unnamed advisers inside and outside Iran, whose identities are withheld for security reasons.
The plan assumes the absence of civil war and broad public backing for Prince Pahlavi during the transition.
Preventing famine and securing essential goods
One of the first challenges in any transition would be stabilizing supply chains.
Mohammadreza Jahanparvar, an economist involved in the project, told Iran International that financing essential imports would not be the primary obstacle.
“Funding essential goods is not particularly difficult,” he said. “The greater challenge is restoring communication and negotiation with suppliers. Iran has never been sanctioned on food.”
According to Jahanparvar, supplier countries have been identified and preliminary discussions held to allow imports to resume immediately after regime collapse.
Security, however, poses a parallel challenge. Control over ports, customs terminals and transportation corridors would be critical to prevent disruption. The handbook’s section on “Maintaining Core Functions” prioritizes the rapid restoration and protection of vital systems, including food production and healthcare, from day one through the first three months.
Maintaining uninterrupted flows of energy and water is another pillar. In its “Seize and Stabilize” section, the plan calls for securing key infrastructure – energy facilities, oil and gas installations, water systems and power plants – using vetted army units to deter sabotage. The criteria for vetting are not publicly detailed, likely for security reasons.
A related initiative, known as “National Cooperation,” was launched in July 2025. It invited civil servants, security personnel and members of the armed forces to signal their willingness to cooperate in a future transition by scanning a QR code broadcast during a live Iran International program. In August, Prince Pahlavi said 50,000 individuals had responded. Iran’s armed forces are estimated to number roughly 640,000.
Financing the transition
Tehran’s draft budget for the next Iranian year (starting on March 21) projects total expenditures of 401,740 billion tomans (or 4,017.4 trillion rials) approximately $25 billion at an exchange rate of 1,620,000 rials to the dollar – equivalent to about $2 billion per month simply to sustain current operations.
Sanctions have frozen substantial Iranian assets abroad while also limiting the country’s external borrowing.
Jahanparvar estimates that between $100 billion and $200 billion in Iranian assets could potentially be recovered.
By comparison, oil export revenue in 2025 was estimated at between $30 billion and $60 billion, meaning recoverable assets could equal two to seven years of oil income.
Sanctions nonetheless pose a practical hurdle. Even if assets exist overseas, access would not be automatic during a transition. Jahanparvar argues that the US president could grant temporary three-month waivers, with comparable measures potentially adopted by European governments.
“Based on precedents in other sanctioned countries,” he said, “short-term exemptions pending formal legal review are both feasible and common.”
Other stopgap measures could include securing a modest loan from the United States – not primarily for its size, but for the signal it would send to global financial markets. Even if frozen assets remain temporarily inaccessible, they could serve as collateral to unlock short-term international financing.
“Iran has not drawn on its IMF quota since the 1960s,” Jahanparvar noted. “With the political constraints associated with the Islamic Republic removed, those channels could reopen.”
Pessimism or optimism?
All of these measures relate to the emergency phase immediately following a collapse.
If the more dire scenarios fail to materialize, the subsequent stabilization phase could see the return of thousands of Iranian entrepreneurs and professionals. With at least nine million Iranians living abroad, the diaspora represents a significant pool of capital, expertise and investment potential. During the national uprising, many demonstrated continued ties to their homeland.
The future remains uncertain and dependent on both internal dynamics and external actors. Yet one variable, proponents argue, lies largely in the hands of Iranians themselves: national cohesion.
Until 24 hours before the January 8-9 uprising, some questioned whether Prince Pahlavi commanded broad public backing. Then the largest street protests in the Islamic Republic’s history erupted.
For years, the Islamic Republic has invoked worst-case scenarios – “Syrianization,” lack of alternatives, war and insecurity – to discourage defections and blunt support for change.
Yet Iran’s economic indicators already resemble those of a country at war, and the two-day massacre exceeded even the Islamic Republic’s own official tally of 276 civilian deaths from Israel’s 12-day full-scale attack.
Iranian society and political actors may need to prepare for pessimistic outcomes. But at pivotal moments, the country’s recent history suggests, the public has shown an ability to defy the expectations of analysts.
